Analysis & Opinion

LONDON (Reuters) - Richard Branson said he planned to keep control of Virgin Atlantic and IAG boss Willie Walsh was misguided for saying the brand would be ditched by U.S. suitor Delta Air Lines.

"Rumours have been spread in the press that I am planning to give up control of Virgin Atlantic and, according to Willie Walsh ... that our brand will soon disappear. This is wishful thinking and totally misguided," Branson said on Monday.

Delta is in talks with Singapore Airlines (SIAL.SI) about buying its 49 percent stake in Virgin Atlantic, which Branson set up in 1984.

IAG chief executive Walsh told the Daily Telegraph newspaper that Delta's main interest in Virgin Atlantic was its lucrative slots at London's Heathrow airport and the U.S. carrier would not want to keep the Virgin brand.

Separately on Monday, a source familiar with Branson's thinking told Reuters that Virgin Atlantic would form a joint venture on transatlantic flights with Delta if the U.S. carrier bought Singapore Airlines' stake in the British carrier.

Delta and Virgin Atlantic's plan to set up a revenue-sharing deal on flights between Britain and the United States would involve code-sharing, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.

The joint venture could lead to the pair sharing costs and bringing prices and schedules into line, the source said.

The partnership would be similar to that operated by American Airlines (AAMRQ.PK) and IAG's British Airways BA.L since 2010 on transatlantic flights between Canada, Mexico, the United States and many European cities.

Delta has long hoped to break into capacity-constrained Heathrow. Virgin Atlantic is the second-largest carrier at the airport after BA.

A combination with Delta, the second-largest U.S. airline by revenue after United Continental (UAL.N), would be a shot in the arm for Virgin Atlantic, which has been battered by rising fuel prices and the euro zone crisis. It posted an 80 million pounds loss in its last full year.

Delta and Singapore Airlines are close to striking a deal on a Virgin Atlantic stake the Asian carrier bought for 600 million pounds in 1999, the source said.

Earlier this month, sources said Delta was keen to see Air France-KLM (AIRF.PA) - a member of its SkyTeam alliance - buy a stake in Virgin Atlantic to give the pair control of the airline's operations.

The European Union requires EU carriers to be under European control, meaning Delta would need an EU airline as a partner if it wanted majority control of Virgin Atlantic. If Air France-KLM were to buy a small part of Branson's stake, then Virgin Atlantic could continue to be European controlled. (Editing by Hans-Juergen Peters and Dan Lalor)